From June 6, many places across the country began to implement new regulations on transmission and distribution prices.

The source of the new regulations implemented by various localities is the Notice on Provincial Power Grid Transmission and Distribution Prices and Related Matters (Fa Gai Price [2023] No. 526) (hereinafter referred to as the "Notice") recently issued by the National Development and Reform Commission.

The third regulatory cycle refers to the period from 2023 to 2025. The pilot of transmission and distribution price reform was launched at the end of 2014, with a three-year verification price supervision cycle. In 2017, the National Development and Reform Commission approved the transmission and distribution price of the first regulatory cycle (2017-2019) of provincial power grids in China, and completed the approval of the second regulatory cycle (2020-2020) in 2022.

The first financial reporter noted that since mid-May, the development and reform departments of more than 5 provinces (municipalities and districts) across the country have issued intensive documents to explain to users the changes in the content of relevant transmission and distribution prices, and stated that they will be implemented.

Power grid from large supermarkets to "express delivery company"

What changes have been made to the new transmission and distribution price regulations? The first is the profit model of the power grid.

In a broad sense, electricity prices can be divided into on-grid tariffs, transmission and distribution prices, and sales prices. Among them, the transmission and distribution price refers to the transmission and distribution cost included in the sales price, that is, the cost of "transporting electricity".

Before the power reform, the transmission and distribution price of the power grid company was basically "earning the difference", that is, the sales price minus the on-grid electricity price, and the on-grid electricity price and sales electricity price were approved by the National Development and Reform Commission. After the power reform, a relatively open and transparent transmission and distribution price is approved according to the actual cost of the power grid. In this case, the profit of the power grid mainly comes from the permitted cost and the permitted income, the permitted income has little room for change, and the way to increase the profit mainly comes from the difference between the actual cost and the permitted cost.

"This pricing has completely transformed the role of the grid. In the past, the power grid was like a Wal-Mart supermarket, where manufacturers sold goods to Wal-Mart, and Wal-Mart sold goods to users. And the next grid is like a courier company, which can fully provide transportation services. Peng Peng, secretary-general of the China New Energy Power Investment and Financing Alliance, said.

The second is the classification of electricity users. The Circular stipulates that the electricity prices of users will gradually be divided into three categories: residential life, agricultural production and industrial and commercial electricity (except for electricity consumption other than the implementation of residential life and agricultural production electricity prices), and no longer distinguish between large industrial users and general industrial and commercial users. At the same time, for the first time, the Notice verifies the transmission and distribution capacity and demand electricity prices for users of different voltage levels.

Wang Yongli, a professor at the School of Economics and Management of North China Electric Power University, told the first financial reporter that charging fees according to voltage levels more reasonably reflects the difference in electricity costs for different users. Because the electricity sent from the power plant is generally sent to the user after layers of reducing the voltage. The low-voltage current has a longer path, so the cost of electricity is higher, and the investment and operation and maintenance cost of low-voltage distribution network is much higher than that of high-voltage transmission grid.

"The two-part electricity price, that is, the capacity electricity price and the demand electricity price, can be simply understood as the relationship between 'basic salary' and 'commission'. This pricing proposes that users between 100 kVA and 315 kVA can choose to implement a single system or a two-part electricity price; For 315 kVA and above, a two-part electricity price is implemented. This not only ensures that the cost of electricity is reasonably shared, but also enables power users to flexibly arrange electricity consumption and installation capacity according to their own conditions, reduce power loss, and improve equipment utilization. Wang Yongli said.

Third, it clarifies the composition and fluctuation of transmission and distribution prices. The Notice separates the line loss of the grid link and the electricity fee for pumped storage capacity that were originally included in the transmission and distribution price, and strengthens the supervision of the permitted income of the power grid.

In 2019, the Measures for the Supervision and Review of Transmission and Distribution Prices and Costs proposed that the costs of pumped storage power stations and electric energy storage facilities shall not be included in the pricing costs of transmission and distribution. However, the pumped storage price formation mechanism in 2021 clarifies that capacity electricity fees are included in the recovery of transmission and distribution prices. In addition, because the National Development and Reform Commission has not yet clarified the results of the verification price of capacity electricity, the market has certain policy risk concerns about the return on investment of pumped storage power stations, which objectively affects the enthusiasm of social investment.

Zhang Boting, former deputy secretary-general of the China Hydropower Engineering Society, told the first financial reporter that the "Notice" clearly lists the electricity fee for pumped storage capacity separately, combined with the previously announced capacity electricity price list, which releases a clear electricity price signal, which is conducive to forming stable industry expectations, fully mobilizing the enthusiasm of all parties, promoting the construction of pumped storage power stations, giving full play to the comprehensive operation benefits of power stations, and ensuring the safe and stable operation of the power system.

Provincial power grid transmission and distribution prices have risen and fallen

At the same time, the Notice announced a new round of provincial power grid transmission and distribution prices. The first financial reporter noted that the transmission and distribution prices of the current round of provincial power grids have risen and fallen. From a sub-regional perspective, electricity prices in East and Northwest China declined, and electricity prices in power grids in North, Central and Northeast China increased.

For this change, Wang Yongli analyzed, mainly because the specific performance of "permitted cost + reasonable income" in various places is different. For example, according to different resource endowments and needs, some places have built more pumped storage power stations, but some places have not been built, so the current round of pricing has fluctuated. For another example, in some places, the depreciation of fixed assets has been raised or loans have been repaid, which dilutes the cost, so the price of electricity and electricity is reduced.

However, Wang Yongli reminded that there are still many problems to be solved after this round of pricing, which may also bring some resistance to the promotion of reform. The first is how to manage the effective assets of power grid enterprises, the second is how to channel the cross-subsidy of residential electricity consumption and agricultural production electricity, and the third is how to fairly share the fixed assets of power grid enterprises. In the absence of a fully built electricity market, the costs and benefits of all parties need to be rebalanced as a whole.

In general, the reform of transmission and distribution prices has taken substantial steps, which is conducive to promoting the fairness of electricity market transactions and will affect the investment and construction layout of domestic power grids.

Peng Peng believes that in the past two to three years, China's power system has flexible resources for energy storage decision-making allocation. After this reform, the allocation of flexible resources will be handed over to the market, and the energy storage industry will be more stable and transparent, so it will also attract power generation enterprises, incremental distribution network enterprises, etc., to equip energy storage in a targeted manner to obtain corresponding business opportunities and returns.

According to the CICC research report, the structural changes in transmission and distribution prices in the Notice are conducive to reducing cross-subsidies between different types of users, making the accounting of transmission and distribution fees clearer, conducive to the improvement of power grid investment efficiency, and conducive to the development of industrial and commercial energy storage, independent energy storage, virtual power plants and other regulatory resources. (Yicai Author: Ma Chenchen)